WASHINGTON – In testimony before the Senate Banking Committee today, acting Comptroller of the Currency Julie L. Williams told a Senate panel that disclosure is at the heart of consumer protection, that there has been much criticism of the state of credit card disclosures, and that there is room for improvement.

“I urge that we take a new approach, premised on obtaining input, through consumer testing, to learn what information consumers most want to know about, and how to most effectively convey it to them,” Ms. Williams said. “Quick fixes without consumer input and issue-by-issue “patches” to information gaps are not in the long-term best interest of consumers.”

She discussed the need to begin a serious re-examination of how all involved in the consumer disclosure process go about developing, designing, overseeing, and evaluating consumer disclosures for financial products and services. The direction set by Congress and the experience of the Food and Drug Administration using input from consumers to develop the “Nutritional Fact” disclosure for food provides valuable lessons on how to provide disclosures that are both understandable and useful to consumers, she said.

Ms. Williams told the panel that credit card issuers have responded to increasing market competition with innovations in card products, marketing strategies, and account management practices with the goal to gain new customer relationships and that in some instances, this has resulted in an important secondary benefit of expanding access to credit by consumers with traditionally limited choices. Unfortunately, she said, the account management and marketing practices of credit card issuers have come in for criticism in recent years, from both consumer protection and safety and soundness standpoints.

She pointed out that the OCC has issued supervisory guidance alerting national banks of concerns about credit card account management and loss allowance practices, secured cards, and credit card marketing practices, and has used the agency’s enforcement authority, in combination with the prohibition on unfair and deceptive practices contained in the Federal Trade Commission Act, to take formal enforcement actions against several banks to end unfair and abusive practices and make restitution to consumers totaling hundreds of millions of dollars.

Ms. Williams pointed out that the OCC does not have statutory authority to issue regulations defining particular credit card disclosures or practices by banks as unfair and deceptive under the Federal Trade Commission Act, nor does the agency have the authority to issue regulations setting standards for disclosures credit card issuers must make under Truth in Lending Act; in both cases, that authority is vested exclusively in the Federal Reserve Board. For this reason, she noted, the agency took the unusual step of submitting a comment letter responding to the Federal Reserve Board’s Advance Notice of Proposed Rulemaking on Regulation Z’s open-end credit rules implementing TILA.

The OCC has addressed many of the recent changes in credit card practices through its examination process, enforcement actions where necessary, and supervisory guidance, Ms. Williams concluded.

“But consumers also depend on high quality, user-friendly disclosures to help guide them through the increasing complexities of the credit card marketplace,” Ms. Williams said. “The Federal Reserve’s review of Regulation Z disclosures holds promise in this regard, but I respectfully urge that we also need to rethink our approach to disclosure generally, along the lines I have described. The benefits for consumers, for marketplace participants, and for our economy will be well worth it.”